Proceeds from the sale of personal assets are an acceptable source of funds for the down payment, closing costs, and reserves provided the individual purchasing the asset is not a party to the property sale transaction or the mortgage financing transaction.
The lender must document the following:
The borrower’s ownership of the asset.
The value of the asset, as determined by an independent and reputable source.
The transfer of ownership of the asset, as documented by either a bill of sale or a statement from the purchaser.
The borrower’s receipt of the sale proceeds from documents such as deposit slips, bank statements, or copies of the purchaser’s canceled check.
Depending on the significance of the funds in question, the lender may accept alternatives to this required documentation, particularly when the proceeds of the sale represent a minor percentage of the borrower’s overall financial contribution.